Manufacturing reshoring giving an investment push

As states and towns attempt to reel in new automotive projects, they may be getting a helpful lift from widespread manufacturing reshoring discussions.

The cross-currents of "Invest in America" politics, U.S. tax changes, the desire to shorten supply lines and the threat of import tariffs have some manufacturers considering moving factories and jobs back to the U.S. — or into the country for the first time.

According to the Reshoring Initiative, nearly 97,000 jobs across 202 companies were "reshored" to the U.S. from at least 10 countries since 2010. At the same time, foreign direct investment in the U.S. from 12 countries has created 180,926 jobs across 670 companies, according to the initiative.

But the trend has its challenges. One issue is whether the U.S. is prepared for a continuing influx of manufacturing plants in light of the existing struggles of many automotive employers to find all the workers they need.

As Chinese labor rates have risen in recent years, U.S. factories have become more competitive. But the biggest challenge for companies seeking to reshore is attracting enough labor, said Harry Moser, president of the Reshoring Initiative.

To balance the U.S. import-export trade deficit, U.S. factories would need to produce at a level that would require several hundred thousand new manufacturing jobs a year for nearly three decades.

That, in turn, would require more young workers to opt for manufacturing careers, a phenomenon that would probably take a cultural shift to give young Americans the same perception of factory jobs that their counterparts in other countries have.

That cultural phenomenon has proved elusive.

"We have to get a much higher percentage of [students] into apprenticeship programs so that they have the actual skills that are needed on the job," Moser said. "That's been hard."

The uptick in manufacturing activity in recent years is encouraging for the U.S., said Chad Moutray, chief economist for the National Association of Manufacturers. But reshoring is still going to be critical for economic development in the auto industry.

"The capital will be there. I'm not worried about the capital part of it," Moutray said in a Zoom presentation during the Center for Automotive Research Management Briefing Seminars last week. "We need to make sure we have a work force that's ready for the jobs that are coming here.

"We also need infrastructure. We need broadband, we need roads, we need bridges. There's clearly a role for policymakers here to make sure that we have the things that manufacturers need to be able to locate here."

Despite the scramble for business funding during the coronavirus pandemic, Moser believes the necessary capital for reshoring is mostly available. And major auto companies, economic developers, trade associations and manufacturing extension partnerships are enthusiastic about supporting the activity.

But the logistical hurdles and upfront expenses are significant for auto companies considering whether to bring production lines or plants to the U.S.

"Everybody wants reshoring to happen. Everybody is willing to spend money to make it happen," Moser told Automotive News. "But normally, decisions like that take six months to a year, especially in a crisis time like this, when people have other things to worry about."